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What tax breaks do companies get by offering RSUs instead of cash?
by myvoiceismypass 7y ago
What tax breaks do companies get by offering RSUs instead of cash?
- pc86 7y agoNo payroll taxes.
- lokar 7y agoPayroll taxes typically max out short of the typical engineer base pay. The RSU comp would not generate more tax even if it was cash.
- junar 7y agoWhich payroll taxes do you mean? I've seen Social Security (up to the limit), Medicare (no limit), and Additional Medicare (after $200k) being withheld from the employee side. I would assume that employer-side taxes are also being paid.
- 0xEFF 7y agoThe employer medicare tax doesn’t max out. The employee gets most of the benefit of RSU’s. They’re taxed as cap gains, maxing out around 23% while cash is taxed at the marginal rate, closer to 50% all in with state and federal and a FAANG salary.
- et-al 7y agoPretty sure RSUs are taxed as income when they vest. The employee has the option to automatically have a portion of those RSU withheld for tax purposes. Then when the employee sells the stock, the diff from vesting price is naturally taxed as cap gains/losses.
- 0xEFF 7y agoYou’re correct, Schwab says they’re “almost always” taxed at vesting.